Changes to the Affordable Care Act in Tennessee
Kyleah Starling/ The Tennessean

Tennessee's insurance regulator proclaimed the state's Obamacare exchange "very near collapse" Tuesday, after signing off on hefty premium hikes in an extraordinary bid to keep the program afloat.(Photo: emarto, Getty Images/iStockphoto)

Tennessee's insurance regulator proclaimed the state's Obamacare exchange "very near collapse" Tuesday, after signing off on hefty premium hikes in an extraordinary bid to keep the program afloat.

Her remarks largely overshadowing the dramatic premium increases, Commissioner Julie Mix McPeak thrust the issue of preserving competition into the spotlight at a moment when states around the country are grappling with dwindling numbers of insurers willing to sell on the exchange.

The rate approvals, while a tough decision, were necessary to ensure healthcare options in every part of Tennessee when open enrollment begins in November, said McPeak, commissioner of the Tennessee Department of Commerce and Insurance. BlueCross BlueShield of Tennessee is the only insurer to sell statewide and there was the possibility that Cigna and Humana would reduce their footprints or leave the market altogether.

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The future of a type of health insurance subsidy called cost-sharing reductions is causing distress for insurers across the country, and Tennessee Insurance Commissioner Julie Mix McPeak says she can't pinpoint the agency that will make the decision.(Photo: George Walker IV / File / The Tennessean)

“I would characterize the exchange market in Tennessee as very near collapse ... and that all of our efforts are really focused on making sure we have as many writers in the areas as possible, knowing that might be one," McPeak told The Tennessean. "I’m doing everything I can to prevent a situation where that turns to zero.”

Tennessee’s exchange could still see changes. Insurers now apply with the U.S. Department of Health and Human Services to be federally qualified health plans on the exchange, and BCBST said Tuesday it is weighing all of its options.

Cigna and Humana increased their requests for 2017 premiums on the federally run health insurance exchange.(Photo: Created with Piktochart)

Chattanooga-based BCBST, the only insurer that's sold statewide in the first three years of the federal exchange, is estimating that, by the end of 2016, it will have lost close to $500 million in three years. Such losses are unsustainable, said Roy Vaughn, chief communications officer of BCBST.

The insurer, which has previously underscored its support for the individual market, is still weighing what its presence in 2017 will look like. At this point in the process, the insurer only has to notify the state if it decides to make changes to where it will sell plans, McPeak said. It’s too late for another insurer to come onto the 2017 market.

“We agree with the assessment of the ACA marketplace in Tennessee. We appreciate the support of our request to close the gap between our rates and medical expenses for ACA marketplace plans. Beyond rates as we’ve discussed with the (TDCI), we continue to have concerns about uncertainty with the ACA at the federal level," Vaughn said to The Tennessean. "Due to these concerns, we are keeping all of our options open at this point about participating in the 2017 marketplace. We anticipate making a final decision in mid-September.”

Vaughn said concerns about risk programs for insurers, changes to the cost-sharing reduction program for some consumers and the possibilities of legislative action that change the ACA are weighing on the insurer in the run up to cementing its place on the 2017 market.

Gov. Bill Haslam said the federal government should be working on how to ensure competition.

“Ultimately, I think that’s where the federal government needs to come in and address the situation. They created the program and so they’re going to have to address that. They can’t make insurance companies cover people if it doesn’t pay off for insurance companies,” Haslam said. “Those of us who had some structural questions about the Affordable Care Act said OK, we’ve set this up, now you need to come up with an answer for this if we’re not going to have anybody that covers the exchange.”

“I felt like I didn’t have any choice but to allow them to refile their rates," McPeak said.

Cigna asked for and received an average 46.3 percent increase.

Humana asked for and received an average 44.3 percent increase.

BlueCross BlueShield of Tennessee, which did not refile its request, asked for and received a 62 percent increase.

The insurers will now apply with U.S. Health and Human Services for approval as federally qualified health plans, which is expected toward the end of September.

The exchange in Tennessee "continues to evolve and has proven to be particularly complex," said Katie Sulkowski, spokeswoman for Cigna in Nashville. The company will sell plans in Nashville, Tri-Cities and Memphis and is "grateful for the (TDCI's) willingness to review all emerging facts and reach an objective decision on 2017 pricing that allows Cigna to continue offering plans on the state's 2017 individual exchange," said Sulkowski.

The increases underscore the complex environment of the exchange. People who buy plans on the exchange are heavier users of services than anticipated. In addition, there are changes to federal transitional programs in 2017 that will impact insurers financially.

Haslam underscored the unbalanced premium-cost ratio and how the state has had among the lowest premiums on the exchange to-date while having some of the sickest citizens.

“We’re not alone. Tennessee is not in a unique position. A lot of other states are facing that,” Haslam said. “What happened with the Affordable Care Act is that the people being covered that came into the exchange through that were a lot more expensive to cover than both the federal government (and insurers) thought they’d be.”

Insurers in Tennessee have lost money on high claims and heavy use of services. State officials hope that 2017 is the year the companies can break even.

The experiences of insurers on the exchange vary greatly across the country and within regions of states. Health care costs are local and depend on the availability of services and contracts with providers and health systems in cities and counties.

Yet, other insurers, such as Centene and Molina, have found success on the exchange, said Kevin Lucia, senior research professor at Georgetown University.

While Tennessee is not alone in its dwindling roster of insurers, the departures of UnitedHealthcare, Humana and Aetna from some markets are not for the same reasons. In Arizona, Pinal County, at this point, will have no options on the federally run exchange because Aetna decided to pull out.

“Every issuer seems to have a different story," Lucia said. "It’s not one experience. It’s multiple experiences.”

In Tennessee, McPeak said having a market in which 57 counties only has one insurer is “certainly not a success.”

"The sky is not falling and with a little reflection, we expect the Commissioner will agree. The Affordable Care Marketplace in Tennessee will have insurance providers in every county. Even when there is only one company, there will be various plans to choose from," said Walter Davis, executive director of the Tennessee Health Care Campaign.

Prior to the ACA, the state had a competitive individual market but plans were underwritten, meaning costs were tailored to each person’s situation, and people were not guaranteed coverage.

McPeak said the federal government had "early warning signs" that markets were constricting and that she reached out to U.S. Health and Human Services Secretary Sylvia Burwell about her concerns.

Federal officials have been unfazed by the insurers who opt to stop selling plans because the marketplace is young and insurance exits are expected.

“(That) was not all that reassuring to me because I need writers in the market today,” McPeak said. “I don’t need movement in and out of the marketplace … (we need to) keep competition in the exchange market."

Like last year, the rate increases for many people will be largely absorbed by tax credits that offset the monthly premium.

Shoppers who were shocked by higher premiums on renewal letters in 2016 may have seen minimal increases in monthly costs. But the pinch on the wallet can come later in the year if the plan has a high deductible and the person needs to pay a larger amount upfront before insurance coverage kicks in.

“Consumers in Tennessee will continue to have affordable coverage options in 2017. Last year, the average monthly premium for people with Marketplace coverage getting tax credits increased just $2, from $102 to $104 per month, despite headlines suggesting double digit increases,” said Marjorie Connolly, HHS spokeswoman, in a statement.

State officials underscored that the rates will hit many Tennesseans' pocketbooks, particularly those who don't qualify for a subsidy.

"Our team has answered hundreds of phone calls and e-mails from concerned policyholders upset about premium increases and whether they can afford another jump," TDCI spokesman Kevin Walters said. "A 45-year old Nashville resident will face premiums ranging from $500 to over $600 a month, depending on the carrier. To focus on the 'majority' receiving subsidies speaks nothing to those who receive no such assistance and, instead, face $500-plus premiums. While some consumers may switch plans, rising prices are faced by all."